On Thursday evening, attorneys for the Uber drivers in the class action employment lawsuits against the ridesharing company announced that they had reached a settlement for $100 million. Although neither suit has yet gone to trial and the agreement still requires judicial approval, the settlement still marks the end of long and bitter litigation over whether the as many as 385,000 California and Massachusetts drivers included in the class should be classified as employees or independent contractors.
As part of the settlement, Uber has agreed to make a number of changes to its policies. Drivers will be allowed to place signs in their windows that clearly indicate that tips are not included. (One of the claims in the lawsuit was over how Uber took a cut from the included "gratuity.")
Furthermore, drivers will be able to decline trips without negatively affecting their Uber rating. The company will only be able to terminate drivers for sufficient cause, and deactivated drivers will be permitted to appeal their deactivation to panels of their peers. On top of that, drivers can also bring claims to a neutral arbitrator that Uber must pay for.
It seems that Uber will also have to contend with what looks like a sort of union for drivers. In a press release on Thursday night, plaintiffs' attorney Shannon Liss-Riordan wrote, "Uber will facilitate and recognize the formation of a Driver Association, which will have leaders elected by fellow Uber drivers, who will be able to bring drivers' concerns to Uber management, who will engage in good faith discussions (on a quarterly basis) regarding how to address these concerns."
While the association will not be an official union, Liss-Riordan says that it can "play a role similar to a union."
A blog post titled "Growing and growing up" signed by Uber CEO Travis Kalanick was published on Thursday, also discussing the terms of the settlement. "Drivers value their independence—the freedom to push a button rather than punch a clock, to use Uber and Lyft simultaneously, to drive most of the week or for just a few hours," wrote Kalanick. "That's why we are so pleased that this settlement recognizes that drivers should remain as independent contractors, not employees."
In their own announcement, plaintiffs' attorney Liss-Riordan insisted, "Importantly, the case is being settled—not decided. No court has decided here whether Uber drivers are employees or independent contractors and that debate will not end here."
According to Liss-Riordan, the payout is "significant." By their calculations, a driver who opted out of the arbitration clause and has driven over 25,000 miles might receive more than $8,000.
In January, Lyft reached a settlement with drivers in a similar lawsuit for $12.27 million. However the settlement was rejected by the judge earlier this month, and that case may end up going to trial after all.